Global Market Quick Take: Europe – 6 December 2024

Key points

• Equities: S&P, Nasdaq, Dow drop; American Airlines soars; DAX hits record; CAC up despite French politics; Asia mixed, Hang Seng rebounds
• Volatility: VIX steady; labor data and Fed rate cut expectations dominate sentiment
• Currencies: EURUSD rebounds as French government failure fails to spark panic. US jobs report in focus for USD.
• Commodities: OPEC+ price support continues. Copper rising on China stimulus speculation
• Fixed Income: US treasuries steady ahead of payroll data
• Macro events: US Nonfarm payroll

The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.

Saxo’s Outrageous Predictions for 2025 is out, and can be found here

Macro data and headlines

• For the week ending November 30, seasonally adjusted US initial claims rose by 9,000 to 224,000. The prior week's claims were revised up from 213,000 to 215,000. The 4-week moving average increased by 750 to 218,250, with the previous average revised up by 500 to 217,500. Continued claims fell to the lowest level since mid-October, but data had little impact on the expectation of Fed rate cut in December.
• Eight OPEC+ members decided to delay a 2.2Mbpd output cut rollback to April 2025 due to weak demand. The current cuts are part of broader reductions put in place since 2022, currently capping OPEC+ production at 39.725M bpd.
• NFP preview: The non-farm-payroll data is due today and consensus expectations are as below:
• Headline NFP: 220k expected vs. 12k in October (distorted due to the impacts of Hurricanes and strikes at Boeing)
• Unemployment Rate: Expected to remain unchanged at 4.1%, and beneath the September Fed median dot plot view of 4.4%
• Wages: Expected to rise by 0.3% MoM (vs. 0.4% prior) and 3.9% YoY (vs. 4.0%)

The data will be used to help shape expectations for the December FOMC meeting, where the vast majority of analysts expect a 25bps rate cut, while money market pricing is assigning 70% probability of a rate cut. Governor Waller has said that he favours a 25bps rate cut in December, and while some other members have hinted at caution at the pace of easing – that is more a 2025 story. Mary Daly speaks after the NFP release and her comments could be key to shape up December Fed expectations, but a 300k+ headline print may be needed to dissuade the Fed from cutting rates this month. For a trader’s preview of the NFP, read this article. 

Macro events (times in GMT)

Ger (Oct) Industrial Production (0700), Eurozone 3Q GDP (1000), US Nonfarm Payrolls, Unemployment rate (1330), US Dec University of Michigan Sentiment (1500). Fed speeches from Bowman, Goolsbee, Hammack and Daly.

Earnings events

• Next week: Oracle, Autozone, Inditex, Lennar, Costco, Adobe, Broadcom

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: The S&P 500 slipped 0.19%, the Nasdaq 100 lost 0.31%, and the Dow Jones dropped 0.55%, with investors cautious ahead of the November nonfarm payrolls report. Weekly jobless claims rose to 224,000, hinting at a cooling labor market. American Airlines soared 16.7% after naming Citigroup as its exclusive credit card partner, while crypto stocks like Coinbase (-3.1%) and MicroStrategy (-4.5%) gave up earlier gains despite Bitcoin surpassing $100,000. Ulta Beauty surged over 12% in after-hours trading following strong earnings, and DocuSign jumped 14% on solid quarterly results.
• Europe: Germany’s DAX climbed 0.5%, breaking past 20,300 to a new record high, while France's CAC 40 rose 0.4% for its sixth straight gain despite ongoing political instability. Investors found relief in President Macron's expected appointment of a new prime minister after a successful no-confidence vote against Prime Minister Michel Barnier. Banking stocks led gains, with Commerzbank up 3%, and Puma surged nearly 5% to lead the DAX.
• Asia: Hong Kong's Hang Seng index rebounded 1.2%, adding 233 points to 19,789 amid optimism over potential monetary easing from China's central bank in 2025. Goldman Sachs and Morgan Stanley predict a historic 40-basis-point rate cut next year, boosting investor sentiment ahead of key economic meetings. Elsewhere, South Korea’s KOSPI fell 1.6% amid heightened political tensions, while Japan’s Nikkei 225 dropped 0.9% as sentiment remained fragile following weak US equity performance.

Volatility

Volatility remains muted as markets await November’s US nonfarm payrolls report, with the VIX edging slightly higher to 13.54. The options market indicates limited near-term turbulence, reflecting investor confidence in the Federal Reserve's expected 25-basis-point rate cut this month. However, broader volatility expectations may hinge on today’s labor market data and upcoming Chinese economic announcements next week. Steady activity in major indices highlights a wait-and-see approach as markets digest geopolitical and macroeconomic uncertainties.

Fixed Income

French and Italian yields tightened relative to German bunds yesterday, driven by optimism around budget progress in France. Italy’s yield premium narrowed to its lowest since 202. Traders reduced expectations for ECB and BOE rate cuts in 2025, leading to rising bund yields with 5-year Bunds underperforming other tenors. In the U.S., Treasuries were mixed, with the long-end outperforming after earlier losses tied to European rate movements. Short-term yields rose slightly, while long-term yields fell. Treasury price action was muted despite higher-than-expected jobless claims, as markets awaited today’s payroll report.

Commodities

• The Bloomberg Commodity Index trades down 0.5% on the week, with gains in grains and industrial metals offsetting losses in softs and energy. The biggest winners are cocoa, silver, and Paris wheat, while US natural gas, diesel, and coffee all trade lower after a recent surge.
• Crude oil futures trade near the lower end of their recently established tight ranges after OPEC+, as expected, decided to delay, for a third time until April, a planned gradual increase in production. Together with a prolonged rollback until September 2026, the group will continue to focus on price support through active supply management—a quest challenged by rising non-OPEC production.
• Copper, one of this week’s top performers trade around USD 4.23 per pound, amid speculation of additional Beijing stimulus measures.

Currencies

• The US dollar traded softer yesterday versus a stronger Euro, which rose as the France to Germany yield spread tightened despite the failure of the Barnier government. 1.0600 is a critical area for EURUSD, having been the former 2024 low before the recent plunge to sub-1.0400 levels.
• Sterling was also firm, though it shied away from posting new highs versus the single currency, still trading in the 0.8300 area in early trading today.
• AUDUSD trades heavily – with the 0.6400 area the lowest daily close in over a year
• Traders looking forward with anticipation to today’s US labor market report for November, which is the second-to-last major input from the economy ahead of the FOMC meeting the week after next (next Wednesday’s CPI data is the last major input).